We showed that estrogen-stimulated transcriptional activity of human lactoferrin gene in endometrium carcinoma cells, RL95-2, is mediated through a functional imperfect estrogen reponse element (iERE) present in 5' flanking region of the gene. Upstream from the iERE, a DNA sequence (-418 to -378,FP1) is selectively protected by nuclear protein of the endometrium (RL 95-2) and mammary gland (HBL100) cells from DNase I digestion. There are 3 different nuclear proteins binding to FP1 region (C1, C2, and C3), with COUP-TF binding to C2. From the electrophoresis mobility shift assay (EMSA), site-directed mutagenesis and DNA methylation interference analyses, we are able to delineate the position of these proteins that bind FP1. The nucleotide sequence at the 3' end of FP1, TCAAGGTCATC, is an extended half site of the steroid receptor binding element (ERRE). This DNA sequence matches consensus element of a newly characterized subfamily of nuclear orphan receptors such as SF- 1/ELP, NGF1-B, FTZ-F1 bind as monomers. Mutation at Gs in this region abolishes formation of C1 complex and reduces estrogen responsiveness of the reporter plasmid containing the intact lactoferrin iERE. We isolated the cDNA clone from a human endometrium carcinoma cell RI95-2 expression library that encodes the binding protein. The nucleotide sequence of the cDNA and deduced amino acid showed 99% and 95.5% homologies to the hERR1, respectively. By western analysis of RL95-2 nuclear protein with the antibody generated against GST-hERRE1 fusion protein, we found a major protein band at 42 kDa region. When the iERRE of the human lactoferrin gene was mutated to a perfect palindromic structure, the enhancing effect of hERR1 and ERRE was abolished. To examine the mechanism by which hERR1 and ERRE enhance the estrogen response, we performed far-western analyses. Results showed that hERR1 interacted with estrogen receptor by direct protein-protein contact. These findings suggest that hERR1 binds to a DNA element near iERRE interacts with estrogen receptor and enhances estrogen response of human lactoferrin promotor activity.